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Comm 101 5 - Sept 20 - Brand Positioning and Value Propositions.docx

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COMM 101
Jeff Kroeker

September 20, 2012 CLASS 5: BRAND POSITIONING OF BRANDS AND PERCEPTUAL MAPS VALUE  PROPOSITIONS Read: “Positioning – As Popularized by Al Ries and Jack Trout” Online at Quick MBA ( Positioning – used as a communication tool to reach target customers in a crowded marketplace Begins with a product, positioning the product in the mind of the customer • Consumers bombarded with a continuous stream of advertising – information overload • Difficult to change consumer’s impression once it is formed • Easiest way to get into someone’s mind is to be the first o If not #1, must relate itself to the #1 brand • Clear market leader, nearly impossible to displace the leader, especially in short-term o Find a way to position itself in relation to the market leader, increase market share o Usually mistake to challenge leader head-on and try to displace it Positioning of the leader • Top 3 brands in a product category – occupy market share in ratio of 4:2:1 o #1 has twice the market share of #2 • Ries and Trout argue, success of brand not due to high level of marketing acumen of the company, but due to being first in the product category • To maintain leadership position o Should not boast about being #1 – insecure in its position? o First to introduce product, advertising campaign should reinforce that  Coca-cola’s “the real thing” o Single-position strategy - Multibrand rather than changing positioning of existing brand o Willing to embrace change rather than resist it – new technology, new market may threaten existing one (railroad vs. air travel)  Adopt a broader name in order to adapt to change Positioning of a Follower nd • 2 place companies late because they chose to spend time improving product before launching o Better to be first and establish leadership • Not going to be first, must find an unoccupied position in which it can be first o Eg Volkswagen, not the first small car, but Beetle’s slogan “Think small” claim that position in the mind of the customer • Firms successfully claim positions: o Age (Geritol), High price (Mobil 1 synthetic engine lubricant), Gender (Virginia Slims), Time of day (Nyquil night-time cold remedy), Place of distribution (L’eggs in supermarkets), Quantity (Schaefer – “the one beer to have when you’re having more than one”) • Mistake: build a brand trying to appeal to everyone Repositioning the Competition • By convincing consumers to view the competitor in a different way, running advertisements o Coke vs. Pepsi o Pringle’s vs. Wise potato chips (non-natural ingredients sounded like harsh chemicals) • Consumers tend to perceive the origin of the product by its name, rather where it is really made o Vodka, Russian names, but sold and made in the US • Usually lost cause to try to bring a brand back into favour once it has gained a bad image, better to introduce an entirely new brand • ≠ Comparative advertising – convince consumer that one brand is simply better than another The Power of a Name • Most important factor affecting perceptions of it, memorable name • Descriptive name rather than coined (eg Xerox, Kodak) – coined appropriate for new products • Name important for positioning for almost everything – “fair trade act”, “Clean Air Act”, success based on first names • Confusion if similar to another company’s name or too general (“Continental Group”, etc) No-name Trap • Lesser known companies tend to lose their identity when they use abbreviations • Seeking more general names, select shorter name, not individual letters o Trans World Airlines -> Trans World, not TWA The Free-Ride Trap • New product, don’t use band name of existing product • Single brand name cannot hold multiple positions The Line Extension Trap • Eg. Life Savers – introduced chewing gum, inconsistent with consumer’s view of it • Failures – new product does not succeed, or original successful product loses market share When Line Extensions Can Work • Low volume product – sales volume is not expected to be high • Crowded market – if there is no unique position that the product can occupy • Small ad budget – without strong advertising support, makes sense to use house name • Commodity product – undifferentiated commodity product has less need of its own name than a breakthrough product • Distribution by sales reps – those sold on store shelves benefit more from their own name Read: “Three Questions You Need to Ask About Your Brand”, by Keller, K.L., Sternthal, B., and Tybout, A. TRADITIONALLY, the people responsible for positioning brands have concentrated on  points of difference ­the   benefits that set each   brand     apart from the competition . Maytag is distinguished by dependability, Tide by  whitening power, BMW by superior handling. Such points of differentiation are, in many cases,  what consumers  remember about a brand. But   points   of   differentiation   alone   are   not   enough   to   sustain   a brand against  competitors. Managers often pay too little attention to two other aspects of competitive positioning: understanding the  frame of reference within which their brands work and addressing the features that brands have in  common   with   competitors. There   are   always   circumstances   in   which   it's   necessary   to   "break   even"   with  competing brands. Effective brand positioning requires not only careful consideration of a brand's points of difference, but also of  what we call its points of parity with other products. Subway faced a brand­positioning dilemma in 2000 when its ad agency recommended that the sandwich shop chain present  itself as the healthy fast­food brand, using as its spokesperson a 22­year­old man who had lost 245 pounds by following a diet  that consisted largely of Subway sandwiches. The agency was so confident of the appeal of the weight loss story that it financed  the production of a television spot, which ran regionally and produced an average sales increase of more than 15%. The   agency   was   focusing   almost   exclusively   on   Subway's   key   point   of   difference   from   other   fast­food  restaurants: healthfulness. But Subway's executives were concerned about the brand's competitive frame of reference and the  attendant points of parity. While they were eager to reposition the brand­sales had been flat for two years they saw taste as the  sine qua non of the fast­food frame of reference and believed that taste is more important than healthfulness to core fast­food  customers. Subway's research suggested that the company, which has more stores than any other fast­food operation, could  successfully compete on taste with the burger giants, whose sales dwarf Subway's. And executives knew that fast­food  consumers often perceive good taste and healthfulness to be at odds. Management feared that a strong health­centered  campaign would jeopardize the perception of Subway as a fast­food establishment. Subway began running the agency's advertisements nationwide. But recently it has been simultaneously running another  campaign promoting new products on the basis of taste. Whichever approach turns out to be right for the brand in the long term,  the example shows that brand positioning focusing only on a point of difference leaves out important issues. Sound competitive  positioning requires the identification of an appropriate frame of reference and associated points of parity and points of  difference. Subway can continue to differentiate, of course­differentiating is a smart way to keep other potential health­ focused fast­food purveyors out of its business­but it can't forget what business it's in. Have We Established a Frame?  Brand     positioning  starts with establishing a frame of reference, which signals to consumers the  goal they can expect to achieve by using a brand. Choosing the proper frame is important because it dictates the  types of associations that will function as points of parity and points of difference. In some cases, the frame of reference  is other brands in the same category. Coca­Cola is a soft drink. It competes with Pepsi­Cola and RC. But in certain  instances, the frame of reference might be brands in quite disparate categories. Coke, Gatorade, and Snapple belong to the soft  drink, sport drink, and iced tea categories, but they potentially share the frame of reference that consists of all thirst­quenching  drinks. One variable that may influence the choice of frame of reference is the product's stage in the life cycle. When a new  product is launched, competing products are often enlisted to serve as the frame of reference so that consumers can quickly  discern what the product is and what goal it serves. In later stages of the product life cycle,  growth  opportunities (and threats) may emerge outside the product category. Accordingly, shifting the frame of  reference may be necessary. The case of FedEx illustrates this evolution. When Federal Express launched its service, it offered a clear point of difference from traditional mall delivery via the U.S. Postal  Service: overnight delivery. As other providers of overnight delivery services appeared, the new competitors served as a new  frame of reference. FedEx positioned itself as superior to them based on speed and dependability. This point of difference was  reflected in its advertising slogan, "When it absolutely, positively has to be there overnight." While FedEx continues to be concerned about competitors in the overnight delivery category, some of its stiffest competition now  comes from other forms of document transmission. For example, many documents that once would have been sent by overnight  delivery can be faxed or e­mailed more quickly and inexpensively. FedEx's "speedy delivery"  point of difference is  rendered meaningless when the frame of reference is expanded to include fax or e­mail. A new point of  difference is required. Against this new frame of reference, FedEx could choose to  differentiate  on security,  confidentiality, and attention getting capability. This type of differentiation would be supported by FedEx's heavily promoted  tracking capabilities, which distinguish it not only from fax and e­mail, but from other overnight delivery carriers as well. Even established brands need to pay close attention to frames of reference, in some cases expanding their focus in order to pre­ empt the competition. If Campbell's soups, say, were to focus exclusively on competition from Progresso soups, Campbell's sales  could be blindsided by new quick­lunch products such as frozen pasta bowls. Are We Leveraging Our Points of Parity? Once you've chosen an initial frame of reference, think through the points of parity that must be  met if consumers are to perceive your product as a legitimate and credible player within that  frame. Consumers might not consider a bank truly a "bank" unless it offers checking and savings plans, safe­deposit boxes,  traveler's checks, and so on. The approach you use to meet these minimum requirements for playing the game will depend on  where your product is in its life cycle. New Brands. Marketing strategists generally recognize the importance of identifying points of parity when introducing a  new brand, as the FedEx example illustrates. But the more innovative the product, the greater the difficulty of  fitting it into an established frame and meeting the frame's minimum requirements. The brief, lonely life  of Motorola's Envoy underlines this point. Envoy was a personal digital assistant launched in 1994. It received messages wirelessly like a pager, but no one viewed it as a  pager because it was too large (the size of a VI­IS tape) and too expensive ($1,500). Envoy sent e­mail and faxes like a laptop  computer, but it couldn't substitute for a laptop because it lacked a keyboard and sufficient storage. Envoy could store calendar  and contact information like an organizer, but its price tag and cumbersome entry system made it an implausible member of that  category. Envoy lacked sufficient points of parity to belong to any existing category. Without a clear  frame of reference, consumers weren't sure why they should purchase the product. It was withdrawn from the market in 1996. Shortly before Envoy was put to rest, the PalmPilot 1000, a device with only a fraction of the capabilities of Envoy, was  launched. It quickly became the most rapidly adopted electronic device ever. A key factor in the product's success was its point of  parity with electronic organizers; it was able to claim this category as a frame of reference. Jeff Hawkins, the designer of the  PalmPilot, intentionally limited the device's functions to those associated with organizers. The compact size and reasonable price  reinforced its membership in the organizer category, where it set itself apart from others through its simple, one­button PC  synchronization.  Brand     Extensions . When extending a brand, it's easy and dangerous­to shortchange points of parity. The  more an extension differs from a base brand, the greater the importance of focusing on the frame  of reference. For example, when Nivea, which markets its skin cream as "gentle" and "protective; started selling deodorant,  establishing that the deodorant did what deodorants do­stop odor­was essential. Once that was established, marketers could  think about pushing the gentle and protective qualities already associated with the Nivea brand. Dove could have learned from Nivea. Dove, known as the soap with "moisturizing lotion," moved into the dishwashing­liquid  business with a product that claimed to "soften your hands as you do the dishes: Sales were disappointing, perhaps because  consumers were looking for a dishwashing liquid that cleaned the dishes rather than softened the hands. Dove needed to  establish its points of parity with competitors before stressing its differences.  Established     Brands . Managers of established brands also need to  reassess points of parity from time to  time, because attributes that were once differentiators can become minimum requirements. When  Procter & Gamble developed an ingredient for dishwashing liquid that cut grease, it wasn't a differentiator for long­ P&G itself  added the ingredient to its other brands. Savvy marketers can hold off a competitor's point of difference by creating competitive points of parity  Gillette is no longer the only company selling triple­blade razors, for example. In this way, a brand can "break even" in  an area where competitors are trying to break away and then achieve a point of difference in some  other area. Visa and American Express both market credit cards. Visa's point of difference is that it is the most convenient  card it can be used in many places. American Express highlights the prestige associated with use of its card. Having established  these points of difference, Visa and American Express now compete by attempting to blunt each other's advantage. Visa offers  gold and platinum cards to enhance the prestige of its cards; American Express has increased the number of vendors that accept  its cards. By attacking a competitor's point of difference and recasting it as a point of parity, a  company hopes to draw attention to its own point of difference. The benefits of even the savviest brand positioning don't necessarily last forever. Palm is under fire from an increasing number of  competitors, and even mighty FedEx has failed in some arenas (witness its mid­198os push for remote faxing), although its  recent alliance with the Postal Service suggests that another rethinking of both the company's points of parity and points of  difference is under way. Are the Points of Difference Compelling? You shouldn't rely solely on points of difference when positioning a brand, but you shouldn't ignore them either. Assuming a  frame of reference is identified correctly, points of difference­ even seemingly contradictory one scan be powerful. Strong,  favorable,   unique   associations   that   distinguish   a brand from   others   in   the   same   frame   of  reference are fundamental to successful brand positioning. But it's important to avoid a one­dimensional view  of differentiation. Careful analysis shows that there are   three     types of     brand     differences:     brand     performance    associations ,    brand     imagery associations, and consumer insight associations . By considering each of  these kinds of differences, you can better target 
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